New national housing report echoes study conducted by Federal Home Loan Bank of Indianapolis

/EIN News/ -- INDIANAPOLIS, July 24, 2024 (GLOBE NEWSWIRE) -- A new annual report by the National Low Income Housing Coalition (NLIHC) that highlights current trends in rental housing and average wages across the country echoes similar sobering findings of a housing needs assessment conducted by the Federal Home Loan Bank of Indianapolis (FHLBank Indianapolis or Bank) in 2023.

Titled “Bridging the Gap: Housing and Community Needs in Indiana and Michigan,” the FHLBank Indianapolis study conducted by third-party consulting firm Atria Planning found that while hourly wages in Indiana and Michigan rose an average of 11% between 2019 and 2023, average rent costs increased at a higher rate of 30%. Notably, the average home purchase price saw an even greater increase, rising an average of 48% during that time, highlighting the increasing struggle to find affordable housing solutions for low- and middle-income households.

The NLIHC’s report, titled “Out of Reach: The High Cost of Housing,” once again calls attention to disparities between the rapidly rising cost of rental housing and comparatively stagnant wages earned by a significant portion of renters across the country.

“Out of Reach” highlights a central statistic: the Housing Wage, which estimates the hourly wage required to afford a modest rental home at HUD’s Fair Market Rent levels. Industrywide, the standard for what constitutes “affordable” housing is generally accepted to be no more than 30% of a household’s total monthly income.

National report highlights
In Indiana, the NLIHC reports the estimated number of work hours required to afford a modest one-bedroom unit at Fair Market Rent is 101 hours a week. The housing wage needed to afford a modest two-bedroom apartment is $22.07 an hour. “Out of Reach” further estimates that over 350,000 renter households, or 44% of renters, earn less than 50% of the local Area Median Income.

In Michigan, the NLIHC reports the estimated number of weekly working hours required to afford a modest one-bedroom unit at Fair Market Rent is 72 hours a week, and the necessary housing wage to afford a two-bedroom apartment is $23.16 an hour. Per the report, nearly 500,000 households — 45% of Michigan renters — earn below 50% of the local Area Median Income.

Bank report highlights
Echoing these findings, the Bank’s “Bridging the Gap” study further reports that Indiana and Michigan combined are home to about 800,000 renters who pay more than 30% of their income toward housing costs. Of these, more than 400,000 spend more than 50% of their income on housing costs and are considered severely cost burdened.

Adding to the problem, the affordability contracts on more than 30,000 existing rental units developed through tax credits in Indiana and Michigan are set to expire within the next five years, highlighting a significant need for action.

“Bridging the Gap” further examines rising affordability problems for even low- to middle-income homeowners, who historically have been more insulated from the worst problems caused by inflation and rapidly rising rents. The Bank’s report further illustrates that incomplete methodology can give rise to misconceptions about an area’s true housing affordability problems.

Notably, the report found that when comparing typical home prices with area median income, most metro areas within Indiana and Michigan — excluding Traverse City and Ann Arbor, Mich., and Lafayette and Bloomington, Ind. — would be considered affordable. However, when quantifying the number and percentage of households spending more than 30% of their income on housing, significant affordability challenges appear in areas with high poverty, like Detroit and Flint, Mich. and Gary, Ind., as well as in rural areas like central and northern Michigan. This approach also highlights unaffordability in areas with significant economic disparity such as college towns and areas with high tourism.

For more information on how FHLBank Indianapolis is working to support middle- and low-income renters by increasing and improving the available housing stock and supporting affordable housing development across Indiana and Michigan, see the Community Programs page on fhlbi.com.

Media contact information:
For more information, contact Katherine Marshall, Corporate Communications Specialist, at kmarshall@fhlbi.com.

Federal Home Loan Bank of Indianapolis: Building Partnerships. Serving Communities
FHLBank Indianapolis is a regional bank in the Federal Home Loan Bank System. FHLBanks are government-sponsored enterprises created by Congress to provide access to low-cost funding for their member financial institutions, with particular attention paid to providing solutions that support the housing and small business needs of members' customers. FHLBanks are privately capitalized and funded, and they receive no Congressional appropriations. One of 11 independent regional cooperative banks across the U.S., FHLBank Indianapolis is owned by its Indiana and Michigan financial institution members, including commercial banks, credit unions, insurance companies, savings institutions and community development financial institutions. For more information about FHLBank Indianapolis, visit www.fhlbi.com and follow the Bank on LinkedIn, and Instagram and X at @FHLBankIndy.